Globalisation and Impact on Individuals

I decided to write the Post on Globalisation and impact on Individual Household after reading the Book "New Systems Competition" by Sinn, Hans-Warner. Somehow I pushed this task aside, as I am busy at work. I really want to share with my readers what economists are thinking about globalisation and its impact from the books I read. But, frankly I am very confused how to start the column on Globalisation and its impact on Individuals.

Today’s globalisation is operating with higher resolution. It is not enough to think of skill groups and sectors; the impact is more unpredictable, sudden and individual than in the past. The current crisis may pose political challenges to both financial development and economic integration. The current global financial crisis highlights the vexed issues of what role national governments should and do play in an internationally integrated economic system. Government policies meant to shelter citizens from risk may indeed be more important in countries where international market access fosters opportunities to trade but also exposes workers to more frequent and intense shocks.

The relationship between global work force is negative as everyone wants to grab the piece of cake available and leading to internal politics. This suggests that as technological progress and multilateral trade liberalisation have made borders less of a barrier to economic activity but introduced lot of politics into the system. As an increasingly globalised economic system increases the risk households face and makes it harder, someone has to pick up the slack. As globalisation progressed, financial development substituted for government policies. Financial markets must indeed be more important if international competition makes it difficult to implement social protection schemes while introducing new sources of income risk.

Globalisation increased aggregate incomes and also allowed aggresive borrowing across the countries to buffer the ups and downs of needs and made it possible to reap the fruits of globalisation in terms of overall competitiveness. But, for individual households, it is not advisable to borrow a lot and go bankrupt upon negative income shocks.

Financial markets are indeed in trouble. To steer clear of the Great recession path we are in now, where redistribution is no longer very effective and financial markets are key to the sustainability of international integration. we must develop an internationally coordinated financial regulation framework and avoid retracing backwards to decayed policies of international integration and financial development.